UK gas prices breached record levels in recent years, with energy bills rocketing and likely to increase by another 12% during this winter.
Worrying official predictions that energy costs will stay high and volatile for years to come.
One response to these soaring costs, and calls for greater energy security, has been to double down support for greater exploration and production of oil and gas in the North Sea.
However, analysis of the last 13 years of new North Sea oil & gas licences show that these fields produced just 16 days worth of gas, half of which was sent to the Netherlands. The UK Government’s own figures predict any new licenses will only provide 103 days worth of gas for domestic use, which would also be sold on international markets.
Furthermore, a former senior minister admitted that ‘additional UK production won’t materially affect the wholesale market price’ for gas.
Issuing more licences to drill doesn’t change the geology of the North Sea or speed up the process for extracting this gas. In fact, the new Rosebank development will only go-ahead with tax breaks for the Norwegian developers.
So whilst it may seem common sense to extract more in the face of the energy bills crisis, the reality is that greater extraction of oil and gas in the North Sea will have a minimal impact in helping families keep warm in winter – it is a false solution to the cost of living crisis faced by millions across the UK.
Due to the physical limits of the North Sea basin, the UK will be forced to increase gas imports regardless of any new production, until it implements policies to reduce gas demand through reducing energy waste.
Indeed, while the use of fossil fuels to generate electricity is on a steady path to zero by 2035, 80% of the gas that is used in gas-fired power stations will come from overseas.
So as the North Sea continues to decline, a just transition to new jobs for people employed in the industry will become vital. Currently the debate about job losses is shrouded in misinformation with the North Sea lobby using figures that do not paint a clear picture (the BBC More or Less programme has a useful explanation).
The reality is that the North Sea is a mature basin, with declining reserves and declining jobs. The number of jobs supported by the oil and gas industry has halved over the past decade. Workers are demanding clear accessible routes out of high carbon jobs and there is an urgent need to support people to transition to clean energy industries.
Government and industry should spend their energy developing a new plan for the North Sea and the parts of the economy dependent on it.
One such proposal, “A new deal for the North Sea”, shows that jobs have been on the decline in the North Sea energy economy for years already. The report argues for policies such as instituting a jobs guarantee scheme in areas with highest dependence on oil and gas, alongside work to protect the supply chains which have built up to service the sector.
More broadly, the public do not support new fossil fuel extraction licences – even in Scotland. Opposition to new oil and gas fields being developed in the North Sea can also be found among over 100 organisations including trade unions and environmental groups.
Instead, official statistics show that 85% of the public support the use of renewables, with just a handful opposed to their use.
Renewable electricity generators have become increasingly cheap, with prices declining as capacity increases. The House of Commons Library researchers found that “even before the rise in gas prices, new renewables schemes were able to generate electricity more cheaply than fossil fuels.”
In 2021, the global average lifetime cost of electricity generation for new solar panels and hydropower generators was 11% lower than the cheapest new fossil fuel generator, while onshore wind was 39% lower. During the 2021-24 gas price spike, this gulf in prices increased even further.
The more renewable energy that is on the grid and the quicker more energy efficiency measures are implemented, the faster bills will come down and the country will be better protected against future energy shocks.
Using already available technology, research indicates countries can increase electricity use for heating processes from roughly 7% to 90% in the case of buildings. Further, gas imports can be reduced by 2.6% for every additional 1% in energy savings.
Despite this, there continues to be more support for North Sea expansion among some UK and Scottish politicians. Tessa Khan, from End Fuel Poverty Coalition members Uplift, explains why this is a problem:
“New North Sea oil and gas will do nothing to solve the crisis we face, which is one of affordability. Ministers have publicly conceded that new domestic production will not lower bills.
“Plus, the geology of the basin means that most of what’s left is oil, which we largely export, and it takes on average 28 years to go from licensing a field to production, if they produce anything at all.
“Around 200 licences have been issued to companies since 2014 but barely a handful of these are producing any oil and gas today.
The Greenpeace chief UK scientist, Dr Doug Parr, agrees:
“Unleashing a North Sea drilling frenzy isn’t a plan to help bill payers but a gift to the fossil fuel giants already making billions from this crisis.
“New oil and gas could take a quarter of a century to pump out, will be eventually sold at global prices, and have no real impact on energy bills yet still fuel the climate crisis.”